"If you fall behind, run faster. Never give up, never surrender and rise up against all odds."
Securing your first investor is a significant milestone for any startup. You finally have access to the much-needed funds to cover the initial costs of your business, validation, and new points of access for further investment. Attracting investors can be difficult in a market with so many new ideas and people looking to be the next Jeff Bezos. To increase your chances of success, you should have a strategy. In this article, we’ll look at some ways you can get started.
1. Understand the Investor’s Perspective
Before you begin doing anything, you must first identify who you will ask for money from and what their business style is. You’ll also need to be cognizant of their background and the types of businesses that they typically are willing to fund. You should make yourself knowledgeable about the different kinds of investors there are as well.
Remember that investors are operating on a risk-reward system and that you need to ensure you make your idea shine. If there are any potential risks, make sure that you reassure them that you have thought about it and are planning to take the necessary steps to mitigate that risk.
2. Construct a Strong Business Plan
Make sure that you prepare well before the meeting with your investor. You’ll need to have a compelling pitch that explains your idea in a way that investors can understand with ease. Avoid using excessive jargon and just get down to the details. Ideally, your pitch should:
- Identify a problem that you’re trying to solve.
- Showcase why your solution is something worth looking into (how’s it innovative?)
- Show what advantage you have over your competitors
- How much money you’re asking for
You’ll also need to make sure that you can explain your business concept, target market, revenue model, and financial projections. Aside from having a killer idea, investors want to know that you have thought about sustainability, growth, and profitability. They’re in for the money, just like you are.
Part of having a solid business plan is to prepare a due diligence package. This goes along with letting investors know that you’ve done your research. Include financial statements, legal documents, customer contracts, and any other relevant intellectual property. You want to make sure that you are giving your investors to full picture so that they feel more comfortable deciding in your favor.
3. Get a Team
Juggling everything that goes into making a solid business plan can be a lot for one person to handle. Beyond this, investors like to see that you have a strong team backing their investment. Show that you are part of a group of experienced and talented people. You should also make it a point to showcase all of you and your team’s achievements.
4. Network and Attend Pitch Events
When looking for investors, it’s best to start early. Take time out to attend different pitch events so that you can begin having a working relationship with people in different industries. Don’t be afraid to participate in pitch competitions or pitch your business to start-up accelerators. You never know what investors might be in attendance. Your idea might catch their eye, or they might introduce you to someone else who would be interested in funding your venture.
5. Have an Online Presence
Today, having a website and being active on social media is just another part of running a business. Just because you are just starting out, doesn’t mean that you should neglect your online presence. Investors are active on social media, so make sure that you are advertising your brand, mission, and the ways that your startup will be game-changing.
Online platforms like AngelList, Gust, or Kickstarter can help you reach a large number of people who are interested in investing. Make sure that you are consistently interacting with interested parties; you never know when you might strike a deal. Outside of these platforms, crowdfunding campaigns can also catch the eye of potential investors who resonate with your mission.
6. Be Prepared for Rejection
Finding an investor can be tricky. Investors are often brutally honest about when and why they do or don’t invest. If you’re on the receiving end of a rejection, do your best not to let that shake you. Rejection is all a part of the process. Not everyone will believe in your vision, and that’s okay. Stay diligent and committed until you find the right investor that is.
One of the most important steps for a startup is acquiring the money to help grow your business. As nerve-wracking as it is, pitching yourself to investors is the only way that they will be able to identify your startup as something worth investing in. If you follow the tips above, you’re sure to give yourself an edge in catching the attention of investors.
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